2 August 2008 Media Statement

English reaches for red herring to justify red ink

National has confirmed they would borrow to cover the massive hole they will create in the public’s accounts if elected – unless they are prepared to slash public services once again, Finance Minister Michael Cullen said today.

John Key has committed himself to two rounds of tax cuts in one financial year without waiting to see the state of the government’s accounts in the Pre Election Update, an approach Dr Cullen described as ‘credit card economics.’ Mr Key and Bill English have refused to release any numbers or specifics on their debt plan, with Mr Key asking the Party’s conference to ‘trust us.’

“The National Party’s proposed economic programme for New Zealand can be summed up in four words: ‘More Borrowing From Foreigners,’” Dr Cullen said.

“Bill English’s attempt to justify is borrow and hope fiscal management by promising to borrow only for infrastructure is an insult to the intelligence of New Zealanders.

“Given that Labour is already undertaking a huge infrastructure investment programme – with massive investments in roads, energy, hospitals, schools, and trains – Mr English’s spin will not wash.

“It is certainly true that if Mr English wants to increase that investment programme even more, he would have to borrow more. But he would have to borrow still more even on top of that to pay for his tax cuts unless there were to be a big cutback on services. Labour has already committed all cash on hand to our $10.6 billion tax cut programme.

“But because Labour saved for a rainy day, we can have those tax cuts without having to cut back on services or support when they are needed most. John Key and Bill English want to throw that away.

“National proposes staking a cash advance out on the public credit card and to pass the bill on to our children and grandchildren – National will do and say anything to get elected.”

The Labour-led government’s tax cut programme will deliver $50+ a week to around 50 per cent of households at full implementation. The government has already forecast cash deficits of $3.5 billion per annum over the next few years.

ENDS

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